Economic think tank Economic Policy and Business Development (EPBD) has expressed concerns over high interest rates, saying that due to the policies of the State Bank, the government was paying a heavy price for debt and the private sector is shrinking because of heavy taxes.
IN a statement EPBD said the State Bank of Pakistan has cut interest rates by only one percentage point since January 2025 while the annual average real interest rate has been around 8.5 percent.
It further said the business costs were rising due to high interest rates.
During this time, additional payments of Rs 3 trillion were made to banks. Due to the State Bank’s policy, the government is having to pay a heavy price for the debt.
Due to these policies, the private sector is shrinking. It said due to monetary policy decisions, heavy taxes were being imposed. Economic growth is slowing down.
The country’s debt burden is increasing. EPBD said that inflation has increased in recent months, which has led to a decline in real interest rates.
Despite the inflation rate reaching 6.2 percent, the interest rate has been maintained at 11 percent. Earlier, when inflation was from 0.3 percent to 5 percent, the interest rate was maintained at 11 percent. There is no coordination between interest rate and inflation.
